Stock Analysis

Read This Before Selling VersaBank (TSE:VB) Shares

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TSX:VBNK
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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in VersaBank (TSE:VB).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

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VersaBank Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by President David Taylor for CA$213k worth of shares, at about CA$6.50 per share. We do like to see buying, but this purchase was made at well below the current price of CA$8.61. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

VersaBank insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
TSX:VB Insider Trading Volume December 16th 2020

VersaBank is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at VersaBank Have Bought Stock Recently

It's good to see that VersaBank insiders have made notable investments in the company's shares. Overall, five insiders shelled out CA$130k for shares in the company -- and none sold. That shows some optimism about the company's future.

Does VersaBank Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. VersaBank insiders own about CA$25m worth of shares. That equates to 14% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The VersaBank Insider Transactions Indicate?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest VersaBank insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - VersaBank has 1 warning sign we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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